There is the tax consideratin b/w the ind. bonds and the bond fund if you hold the bonds in a taxable account. The TIPS funds (at least Vanguard's) distribute both the yield and inflation adjustments to the TIPS. The individual TIPS only distribute the yield, and the inflation adjustment is added to the principle of the bond. The IRS taxes both the yield and the inflation adjustment to the TIPS. By holding ind. TIPS, you still have to pay income taxes on the inflation adjustment, even though you can't get that money until you sell the bond or it reaches maturity.

Alec